-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, atRiLRgq6CtEale1vOhmT6c7YggDyVi/PtPsn8wPlHai061RH/+IlD9uFEx79EHs wXzSBMXmck7PhxXypbrQGw== 0000075234-94-000015.txt : 19940815 0000075234-94-000015.hdr.sgml : 19940815 ACCESSION NUMBER: 0000075234-94-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OWENS CORNING FIBERGLAS CORP CENTRAL INDEX KEY: 0000075234 STANDARD INDUSTRIAL CLASSIFICATION: 3290 IRS NUMBER: 344323452 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03660 FILM NUMBER: 94543636 BUSINESS ADDRESS: STREET 1: FIBERGLASS TOWER CITY: TOLEDO STATE: OH ZIP: 43659 BUSINESS PHONE: 4192488000 MAIL ADDRESS: STREET 1: FIBERGLASS TOWER CITY: TOLEDO STATE: OH ZIP: 43659 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 1994 Commission File No. 1-3660 Owens-Corning Fiberglas Corporation Fiberglas Tower, Toledo, Ohio 43659 Telephone No. (419)248-8000 A Delaware Corporation I.R.S. Employer Identification No. 34-4323452 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Shares of common stock, par value $.10 per share, outstanding at July 31, 1994 43,662,236 PAGE -2- PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- (In millions of dollars, except share data) NET SALES $ 852 $ 754 $ 1,529 $ 1,405 COST OF SALES 644 578 1,167 1,090 ------- ------- ------- ------- Gross margin 208 176 362 315 OPERATING EXPENSES Marketing and administrative expenses 91 81 178 159 Science and technology expenses 17 17 33 33 Restructuring costs (Note 4) - - 89 23 Other (Note 4) 5 5 34 7 ------- ------- ------- ------- Total operating expenses 113 103 334 222 ------- ------- ------- ------- INCOME FROM OPERATIONS 95 73 28 93 Cost of borrowed funds (23) (22) (45) (45) ------- ------- ------- ------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 72 51 (17) 48 Provision for income taxes (Note 8) 26 19 3 26 ------- ------- ------- ------- INCOME (LOSS) BEFORE EQUITY IN NET INCOME OF AFFILIATES 46 32 (20) 22 Equity in net income (loss) of affiliates (1) 1 (2) 2 ------- ------- ------- ------ INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 45 33 (22) 24 Cumulative effect of accounting changes (Notes 5, 6, 7, and 8) - - 85 26 ------- ------- ------- ------- NET INCOME $ 45 $ 33 $ 63 $ 50 ======= ======= ======= ======= The accompanying notes are an integral part of this statement.
PAGE -3- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Continued) Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- (In millions of dollars, except share data) NET INCOME PER COMMON SHARE Primary: Income (loss) before cumulative effect of accounting changes $ 1.03 $ .76 $ (.49) $ .56 Cumulative effect of accounting changes - - 1.93 .60 ------- ------- ------- ------ Net income per share $ 1.03 $ .76 $ 1.44 $ 1.16 ======= ======= ======= ======= Assuming full dilution: Income (loss) before cumulative effect of accounting changes $ .95 $ .71 $ (.35)$ .58 Cumulative effect of accounting changes - - 1.70 .53 ------- ------- ------- ------ Net income per share $ .95 $ .71 $ 1.35 $ 1.11 ======= ======= ======= ======= Weighted average number of common shares outstanding and common equivalent shares during the period (in millions) Primary 44.1 43.5 44.0 43.4 Assuming full dilution 49.9 49.3 49.8 49.3 The accompanying notes are an integral part of this statement.
PAGE -4- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET June 30, December 31, 1994 1993 -------- ------------ (In millions of dollars) ASSETS CURRENT Cash and cash equivalents $ 15 $ 3 Receivables 447 324 Inventories (Note 10) 259 221 Deferred income taxes 141 136 Insurance for asbestos litigation claims - current portion (Note 12) 175 125 Other current assets 30 18 ------- ------- Total current 1,067 827 ------- ------- OTHER Goodwill (Note 3) 155 77 Investments in affiliates 59 63 Deferred income taxes 352 428 Insurance for asbestos litigation claims (Note 12) 565 643 Other noncurrent assets 106 81 ------- ------- Total other 1,237 1,292 ------- ------- PLANT AND EQUIPMENT, at cost Land 48 44 Buildings and leasehold improvements 578 559 Machinery and equipment 2,126 1,978 Construction in progress 132 88 ------- ------- 2,884 2,669 Less--Accumulated depreciation (Notes 5 and 9) (1,800) (1,775) ------- ------- Net plant and equipment 1,084 894 ------- ------- TOTAL ASSETS $ 3,388 $ 3,013 ======= ======= The accompanying notes are an integral part of this statement.
PAGE -5- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Continued) June 30, December 31, 1994 1993 -------- ------------ (In millions of dollars) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT Accounts payable and accrued liabilities (Note 4) $ 568 $ 495 Reserve for asbestos litigation claims - current portion (Note 12) 300 275 Short-term debt (Note 3) 186 77 Long-term debt - current portion 28 29 ------- ------- Total current 1,082 876 ------- ------- LONG-TERM DEBT (Note 3) 1,122 898 ------- ------- OTHER Reserve for asbestos litigation claims (Note 12) 1,248 1,385 Other employee benefits liability (Notes 6 and 7) 386 346 Reserve for rebuilding furnaces (Note 5) - 124 Pension plan liability 78 78 Other (Note 4) 250 175 ------- ------- Total other 1,962 2,108 ------- ------- COMMITMENTS AND CONTINGENCIES (Note 12) STOCKHOLDERS' EQUITY Preferred stock, no par value; authorized 8,000,000 shares, none outstanding Common stock, par value $.10 per share; authorized 100,000,000 shares; issued 43.7 million shares at June 30, 1994, 43.2 million shares at December 31, 1993 346 315 Deficit (1,109) (1,171) Foreign currency translation adjustments 1 5 Other (16) (18) ------- ------- Total stockholders' equity (778) (869) ------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,388 $ 3,013 ======= ======= The accompanying notes are an integral part of this statement.
-6- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- (In millions of dollars, except share data) NET CASH FLOW FROM OPERATIONS Net income $ 45 $ 33 $ 63 $ 50 Reconciliation of net cash provided by operating activities: Noncash items: Cumulative effect of accounting changes - - (85) (26) Provision for depreciation, amortization, and rebuilding furnaces (Notes 5 and 9) 28 21 55 57 Provision for deferred income taxes 7 - 21 2 Other 1 2 5 5 (Increase) decrease in receivables (46) (51) (80) (86) (Increase) decrease in inventories 24 23 (15) (6) Increase (decrease) in accounts payable and accrued liabilities (29) (8) 7 64 Proceeds from insurance for asbestos litigation claims 14 89 28 167 Payments for asbestos litigation claims (39) (90) (112) (197) Increase (decrease) in accrued income taxes 15 (5) (10) (9) Other (26) (2) 42 9 ------- ------- ------- ------- Net cash flow from operations (6) 12 (81) 30 ------- ------- ------- ------- NET CASH FLOW FROM INVESTING Additions to plant and equipment (64) (43) (104) (65) Investment in subsidiaries, net of cash acquired (Note 3) (107) - (107) - Other 1 (1) 2 1 ------- ------- ------- ------- Net cash flow from investing (170) (44) (209) (64) ------- ------- ------- ------- The accompanying notes are an integral part of this statement.
PAGE -7- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- (In millions of dollars, except share data) NET CASH FLOW FROM FINANCING Net additions to long-term credit facilities $ 129 $ 20 $ 223 $ 20 Other reductions to long-term debt (6) (4) (26) (7) Net increase in short-term debt (Note 3) 60 14 101 14 Other 3 3 4 7 ------- ------- ------- ------- Net cash flow from financing 186 33 302 34 ------- ------- ------- ------- Net increase in cash and cash equivalents 10 1 12 - Cash and cash equivalents at beginning of period 5 1 3 2 ------- ------- ------- ------- Cash and cash equivalents at end of period $ 15 $ 2 $ 15 $ 2 ======= ======= ======= ======= The accompanying notes are an integral part of this statement.
PAGE -8- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SEGMENTS Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- BUSINESS SEGMENTS: (In millions of dollars) NET SALES Building Products $ 572 $ 496 $ 997 $ 907 Industrial Materials 280 258 532 498 ------- ------- ------- ------- 852 754 1,529 1,405 ------- ------- ------- ------- Intersegment sales Building Products - - - - Industrial Materials 28 23 50 44 Eliminations (28) (23) (50) (44) ------- ------- ------- ------- - - - - ------- ------- ------- ------- Consolidated net sales $ 852 $ 754 $ 1,529 $ 1,405 ======= ======= ======= ======= INCOME FROM OPERATIONS Building Products 68 46 25 64 Industrial Materials 37 35 42 40 General corporate expense (10) (8) (39) (11) ------- ------- ------- ------- Income from operations 95 73 28 93 ------- ------- ------- ------- Cost of borrowed funds (23) (22) (45) (45) ------- ------- ------- ------- Income (loss) before provision for income taxes $ 72 $ 51 $ (17) $ 48 ======= ======= ======= =======
PAGE -9- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (1) SEGMENTS (Continued) Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- GEOGRAPHIC SEGMENTS: (In millions of dollars) NET SALES United States $ 660 $ 576 $ 1,190 $ 1,059 Europe and other 134 128 243 253 Canada 58 50 96 93 ------- ------- ------- ------- 852 754 1,529 1,405 ------- ------- ------- ------- Intersegment sales United States 9 11 19 23 Europe and other 7 2 15 3 Canada 28 14 47 26 Eliminations (44) (27) (81) (52) ------- ------- ------- ------- - - - - ------- ------- ------- ------- Consolidated net sales $ 852 $ 754 $ 1,529 $ 1,405 ======= ======= ======= ======= INCOME FROM OPERATIONS United States $ 86 $ 75 $ 79 $ 117 Europe and other 3 4 (7) (14) Canada 16 2 (5) 1 General corporate expense (10) (8) (39) (11) ------- ------- ------- ------- Income from operations 95 73 28 93 Cost of borrowed funds (23) (22) (45) (45) ------- ------- ------- ------- Income (loss) before provision for income taxes $ 72 $ 51 $ (17) $ 48 ======= ======= ======= =======
During the first quarter of 1994, the Company recorded a $117 million pretax charge for productivity initiatives and other actions (Note 4). The impact of this charge was to reduce income from operations for Building Products and Industrial Materials by $70 million and $22 million, respectively, and to increase general corporate expense by $25 million. Geographically, income from operations in the United States, Canada, and Europe and Other was reduced by $56 million, $23 million, and $13 million, respectively. During the first quarter of 1993, the Company recorded a $23 million charge to reorganize its European operations, the full impact of which was reflected as a reduction to income from operations for the Industrial Materials segment (Note 4). PAGE -10- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (2) GENERAL The financial statements included in this Report are condensed and unaudited, pursuant to certain Rules and Regulations of the Securities and Exchange Commission, but include, in the opinion of the Company, adjustments necessary for a fair statement of the results for the periods indicated, which, however, are not necessarily indicative of results which may be expected for the full year. In connection with the condensed financial statements and notes included in this Report, reference is made to the financial statements and notes thereto contained in the Company's 1993 Annual Report on Form l0-K, as filed with the Securities and Exchange Commission. (3) ACQUISITIONS On May 31, 1994, the Company acquired UC Industries, Inc. ("UCI"), a privately held foam board insulation manufacturer based in New Jersey. UCI began operations in 1977 and currently has two manufacturing facilities which are located in Ohio and Illinois. The purchase price of UCI, including possible subsequent contingent cash payments, was $44 million. This business combination was consummated by the exchange of 855,556 shares of the Company's common stock for all of the capital stock of UCI. Included in the $44 million purchase price was a $6 million cash payment to acquire the cash of UCI. The fair market value of the Company's shares on the date of acquisition was $27 million. Pursuant to the terms of the purchase agreement, additional cash consideration may be paid to UCI to the extent that the Company's stock has not achieved a certain market value for ten days during a specified period following the date of acquisition. On June 2, 1994, the Company acquired Pilkington Insulation Limited and Kitsons Insulation Products Limited (collectively, "Pilkington"), the United Kingdom-based insulation manufacturing and distribution businesses of the Pilkington Group. With two fiber glass insulation manufacturing facilities and one rock wool manufacturing facility, Pilkington Insulation Limited is the United Kingdom's largest manufacturer of fiber glass and rock wool insulation. Kitsons Insulation Products Limited is a major supplier of thermal and insulation products to the United Kingdom construction industry and is comprised of 14 distribution centers. The purchase price of Pilkington was $110 million and was financed with borrowings from the Company's newly established short-term bank credit facility. This credit facility has a 364-day term and carries an interest rate of 1/2 of 1 percent over the London Interbank Offered Rate (LIBOR). The rate of interest on borrowings under this facility was 5.125% at June 30, 1994. These acquisitions were accounted for using the purchase method of accounting. Accordingly, the assets acquired and liabilities assumed have been recorded at their fair values and the results of operations of UCI and Pilkington have been included in the Company's consolidated financial statements subsequent to May 31, 1994 and June 2, 1994, respectively. PAGE -11- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (3) ACQUISITIONS (Continued) The purchase price allocations were based on preliminary estimates of fair market value and are subject to revision. The estimated fair value of assets acquired from UCI, including goodwill of $29 million, was $68 million, and liabilities assumed, including $14 million in debt, totalled $24 million. The estimated fair value of assets acquired from Pilkington, including goodwill of $51 million, was $174 million, and liabilities assumed, including $7 million in debt, totalled $64 million. Goodwill is being amortized over 40 years on a straight-line basis. Based upon historical performance, UCI and Pilkington are expected to add approximately $125 million in post-acquisition sales for the Company during 1994. The pro forma effect of these acquisitions was not material to net income for the six months ended June 30, 1994 or 1993. (4) RESTRUCTURING OF OPERATIONS AND OTHER INITIATIVES During the first quarter of 1994, the Company recorded a $117 million pretax charge, or $1.93 per share, for productivity initiatives and other actions aimed at reducing costs and enhancing the Company's speed, focus, and efficiency. This $117 million pretax charge is comprised of an $89 million charge associated with the restructuring of the Company's business segments during the first quarter, as well as a $28 million charge, primarily composed of final costs associated with the administration of the Company's former commercial roofing business. The components of the $89 million restructure charge include: $48 million for personnel reductions, $22 million for divestiture of non-strategic businesses and facilities, $16 million for business realignments, and $3 million for other actions. In the first quarter of 1993, the Company recorded a $23 million charge to reorganize its European operations. This charge included $17 million for personnel reductions and $6 million for the writedown of fixed assets. (5) GLASS-MELTING FURNACE REBUILDS Effective January 1, 1994, the Company adopted the capital method of accounting for the cost of rebuilding glass-melting furnaces. Under this method, costs are capitalized when incurred and depreciated over the estimated useful lives of the rebuilt furnaces. Previously, the Company established a reserve for the future rebuilding costs of its glass-melting furnaces through a charge to earnings between dates of rebuilds. The change to the capital method provides a more appropriate measure of the Company's capital investment and is consistent with industry practice. The cumulative effect of this change in accounting method was an increase to earnings of $123 million, or $2.80 per share, net of related income taxes of $54 million. The effect of this change in accounting method was to increase depreciation expense and eliminate furnace rebuild provision. The pro forma effect of this change was not material to net income for the six months ended June 30, 1993. PAGE -12- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (6) POSTEMPLOYMENT BENEFITS Effective January 1, 1994, the Company adopted Financial Accounting Standards Board Statement No. 112, "Employers' Accounting for Postemployment Benefits." This standard requires the Company to recognize the obligation to provide benefits to former or inactive employees after employment but before retirement under certain conditions. The cumulative effect of the adoption of this standard was an undiscounted charge of $28 million, or $.64 per share, net of related income taxes of $18 million. (7) POSTRETIREMENT BENEFITS OTHER THAN PENSIONS Effective January 1, 1994, the Company adopted Financial Accounting Standards Board Statement No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" for its non-U.S. plans. The cumulative effect of the adoption of this standard was a charge of $10 million, or $.23 per share. (The Company adopted Statement No. 106 for its U.S. plans effective January 1, 1991.) (8) INCOME TAXES Effective January 1, 1993, the Company adopted Financial Accounting Standards Board Statement No. 109, "Accounting for Income Taxes." Statement No. 109 changes the criteria for measuring the provision for income taxes and recognizing deferred tax assets and liabilities. The cumulative effect of adopting the standard increased earnings by $26 million as of January 1, 1993. The reconciliation between the U.S. federal statutory rate and the Company's consolidated effective income tax rate is: Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- U. S. federal statutory rate 35% 34% (35)% 34% Operating losses of foreign subsidiaries (3) (1) 63 21 Difference between foreign tax rates and U.S. statutory rate 2 2 4 1 Provision for taxes on undistributed earnings of foreign subsidiaries - - - (6) State and local income taxes 3 3 2 5 Adjustment to valuation allowance (7) - (28) - Other 6 - 11 - ------- ------- ------- ------- Effective tax rate 36% 38% 17% 55% ======= ======= ======= =======
PAGE -13- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (9) DEPRECIATION OF PLANT AND EQUIPMENT Effective April 1, 1993, the Company extended the estimated useful lives of certain categories of plant and equipment. The effect of this change in estimate was to reduce depreciation expense for the six months ended June 30, 1994 by $5 million compared to the prior year's first six months and to increase income before cumulative effect of accounting changes by $3 million, or $.07 per share. (10) INVENTORIES Inventories are summarized as follows: June 30, December 31, 1994 1993 -------- ------------ (In millions of dollars) Finished goods $ 236 $ 195 Materials and supplies 117 117 ------- ------- 353 312 ------- ------- Less: reduction to LIFO basis (94) (91) ------- ------- $ 259 $ 221 ======= =======
Approximately $104 million and $87 million of net inventories were valued using the LIFO method at June 30, 1994 and December 31, 1993, respectively. (11) CONSOLIDATED STATEMENT OF CASH FLOWS Cash payments, net of refunds, for income taxes and cost of borrowed funds are summarized as follows: Quarter Ended Six Months Ended June 30, June 30, ------------- --------------- 1994 1993 1994 1993 ---- ---- ---- ---- Income taxes $ 1 $ 19 $ (6) $ 27 Cost of borrowed funds 36 36 43 44
Supplemental Disclosure of Non-cash Investing Activities During the second quarter of 1994, the Company acquired UC Industries, Inc. for $44 million, including possible subsequent contingent cash payments. This acquisition was consummated by the exchange of 855,556 shares of the Company's common stock for all of the capital stock of UC Industries. Please see Note 3 to the Consolidated Financial Statements for further information on this acquisition. PAGE -14- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (12) CONTINGENT LIABILITIES ASBESTOS LIABILITIES The Company is a co-defendant with other former manufacturers, distributors and installers of products containing asbestos and with miners and suppliers of asbestos fibers (collectively, the Producers) in personal injury and property damage litigation. The personal injury claimants generally allege injuries to their health caused by inhalation of asbestos fibers from the Company's products. Most of the claimants seek punitive damages as well as compensatory damages. The property damage claims generally allege property damage to school, public and commercial buildings resulting from the presence of products containing asbestos. Virtually all of the asbestos-related lawsuits against the Company arise out of its manufacture, distribution, sale or installation of an asbestos-containing calcium silicate, high temperature insulation product, the manufacture of which was discontinued in 1972. Status As of June 30, 1994, approximately 98,300 asbestos personal injury claims were pending against the Company, 5,300 of which were received in the second quarter of 1994. The Company received approximately 31,700 such claims in 1993, and 26,600 in 1992. Through June 30, 1994, the Company had resolved (by settlement or otherwise) approximately 131,100 asbestos personal injury claims. During 1992, 1993 and the first two quarters of 1994, the Company resolved approximately 58,500 such claims and incurred total indemnity payments of $560 million (an average of about $10,000 per case). The Company's indemnity payments have varied considerably over time and from case to case, and are affected by a multitude of factors. These include the type and severity of the disease sustained by the claimant (i.e., mesothelioma, lung cancer, other types of cancer, asbestosis or pleural changes); the occupation of the claimant; the extent of the claimant's exposure to asbestos- containing products manufactured, sold or installed by the Company; the extent of the claimant's exposure to asbestos-containing products manufactured, sold or installed by other Producers; the number and financial resources of other Producer defendants; the jurisdiction of suit; the presence or absence of other possible causes of the claimant's illness; the availability or not of legal defenses such as the statute of limitations or state of the art; whether the claim was resolved on an individual basis or as part of a group settlement; and whether the claim proceeded to an adverse verdict or judgment. Certain of the Company's principal co-defendants, the 20 members of the Center for Claims Resolution, have entered into a proposed "global" settlement which would require future claimants to satisfy certain medical criteria indicative of significant asbestos-related impairment as a pre-condition to their eligibility for settlement payments. The Company is using similar criteria in the implementation of its own settlement and litigation strategy and is also seeking to require more careful proof than in the past that claimants had significant exposure to the Company's asbestos- containing product or operations. The Company believes that this strategy will reduce the overall cost of asbestos personal injury claims in the long run by channeling indemnity payments to claimants who can establish significant asbestos-related impairment and exposure to the Company's asbestos-containing product or operations and by substantially reducing indemnity payments to individuals who are unimpaired or who did not have significant such exposure. The Company's strategy has resulted in an increased level of trial activity and an increase in the number and amount of compensatory and punitive damage verdicts and judgments against the Company. This strategy may have the effect of increasing average per-case indemnity costs for claims resolved with payment, while also increasing the number of claims dismissed without payment. PAGE -15- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Insurance As of June 30, 1994, the Company had approximately $401 million in unexhausted products hazard coverage (net of deductibles and self- insured retentions and excluding coverage issued by insolvent carriers) under its liability insurance policies applicable to asbestos personal injury claims. Of this amount, $144 million will not be available until the years 1996 through 2000 under an agreement with the carrier confirming such insurance. An additional $48 million (out of the $401 million coverage) is presently the subject of coverage litigation or alternate dispute resolution procedures. All of the Company's liability insurance policies cover indemnity payments and defense fees and expenses subject to applicable policy limits. In addition, the Company has substantial unexhausted non-products coverage under such liability insurance policies; an as yet undetermined amount of such non-products coverage is expected to be available for payment of asbestos personal injury claims and associated defense fees and expenses. The Company has commenced arbitration with its primary level insurance carrier seeking to confirm the availability of certain of its non-products coverage for payment of certain asbestos personal injury liabilities, involving the activities of the Company's former insulation contracting business. The Company is seeking prompt rulings on the issues presented, and the arbitration agreement contemplates a schedule that would result in resolution (subject to appeal) in 1994. For purposes of calculating the amount of insurance applicable to asbestos liabilities, the Company has estimated its recoveries in respect of non-products coverage for claims received through 1999 at approximately $310 million, which represents the Company's best estimate of such recoveries for such claims. The Company cautions, however, that this coverage is unconfirmed and that the actual amounts recovered by the Company could, depending upon the outcome of the arbitration, be much higher or much lower. Reserve The Company's estimated total liabilities in respect of indemnity and defense costs associated with pending and unasserted asbestos personal injury claims that may be received through the year 1999 (the "Liabilities"), and its estimated insurance recoveries in respect of such claims (the "Insurance"), are reported separately as follows: Asbestos Litigation Claims -------------------------- June 30, December 31, 1994 1993 -------- ------------ (In millions of dollars) Reserve for asbestos litigation claims -------------------------------------- Current $ 300 $ 275 Other 1,248 1,385 ------- ------- Total Reserve 1,548 1,660 Insurance for asbestos litigation claims ---------------------------------------- Current 175 125 Other 565 643 ------- ------- Total Insurance 740 768 Net Asbestos Liability $ 808 $ 892 ======= =======
PAGE -16- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Case filing rates were at historically high levels in 1992 and 1993 (approximately 26,600 new claims in 1992 and approximately 31,700 claims in 1993) and an additional 10,700 new claims were received during the first two quarters of 1994. Many of these new claims appear to be the product of mass screening programs and not to involve significant asbestos-related impairment. The large number of recent filings and the uncertain value of these claims have added to the uncertainties involved in estimating the Company's asbestos Liabilities. The Company cautions that such factors as the number of future asbestos personal injury claims received by it, the rate of receipt of such claims, and the indemnity and defense costs associated with asbestos personal injury claims, as well as the prospects for confirming additional, applicable insurance coverage beyond the $401 million referenced above, are influenced by numerous variables that are difficult to predict, and that estimates, such as the Company's, which attempt to take account of such variables, are subject to considerable uncertainty. Depending upon the outcome of the various uncertainties described above, particularly as they relate to unimpaired claims, it may be necessary at some point in the future for the Company to make additional provision for the uninsured costs of asbestos personal injury claims received through the year 1999 (although no such amounts are reasonably estimable at this time). The Company remains confident that its estimate of Liabilities and Insurance will be sufficient to provide for the costs of all such claims that involve malignancies or significant asbestos-related functional impairment. The Company has reviewed and will continue to review the adequacy of its estimate of Liabilities and Insurance on a periodic basis and make such adjustments as may be appropriate. The Company cannot estimate and is not providing for the cost of unasserted claims which may be received by the Company after the year 1999 because management is unable to predict the number of claims to be received after 1999, the severity of disease which may be involved and other factors which would affect the cost of such claims. Cash Expenditures The Company's anticipated cash expenditures for uninsured asbestos- related costs of claims received through 1999 are expected to approximate $808 million, the Company's Liabilities, net of Insurance. Cash payments will vary annually depending upon a number of factors, including the pace of the Company's resolution of claims and the timing of payment of its Insurance. Management Opinion Although any opinion is necessarily judgmental and must be based on information now known to the Company, in the opinion of management, the additional uninsured and unreserved costs which may arise out of pending personal injury and property damage asbestos claims and additional similar asbestos claims filed in the future will not have a materially adverse effect on the Company's financial position. While such additional uninsured and unreserved costs incurred in and after the year 2000 may be substantial over time, management believes that any such additional costs will not impair the ability of the Company to meet its obligations, to reinvest in its businesses or to take advantage of attractive opportunities for growth. PAGE -17- OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) NON-ASBESTOS LIABILITIES ------------------------ In October 1991, the Company and certain of its officers and directors were named as defendants in a lawsuit captioned Gaetana Lavalle v. Owens-Corning Fiberglas Corporation, et al. in the United States District Court for the Northern District of Ohio. Lavalle purports to be a securities class action on behalf of all purchasers of the Company's common stock during the period November 1, 1988 through October 18, 1991. The complaint alleges that the Company's disclosures during the alleged class period contained material misstatements and omissions concerning its contingent liabilities for asbestos claims. The complaint seeks an unspecified amount of damages (including punitive damages) on the theory that such alleged misstatements and omissions artificially inflated the price of the Company's stock. Various other lawsuits and claims arising in the normal course of business are pending against the Company, some of which allege substantial damages. Management believes that the outcome of these lawsuits and claims will not have a materially adverse effect on the Company's financial position or results of operations. -18- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Net income for the second quarter of 1994 was $45 million, or $.95 per share, an increase of 34% compared to net income of $33 million, or $.71 per share, in the second quarter of 1993. (All per share information in this Item 2 is on a fully diluted basis.) Net sales were $852 million, a 13% increase compared to $754 million a year ago. For the first six months of 1994, Owens-Corning reported net income before special items of $63 million, or $1.35 per share, compared to net income of $47 million, or $1.04 per share, for the first six months of 1993. The 1994 special items include an after-tax gain of $123 million, or $2.46 per share, reflecting a change to the capital method of accounting for the rebuilding of glass melting facilities, an after-tax charge of $85 million, or $1.70 per share, for productivity initiatives and other actions, a non-cash, after-tax charge of $10 million, or $.20 per share, to reflect adoption of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" (SFAS No. 106), for plans outside the United States, and a non-cash, after-tax charge of $28 million, or $.56 per share, to reflect adoption of SFAS No. 112, "Employers' Accounting for Postemployment Benefits" (SFAS No. 112). The 1993 special items included an after-tax credit of $26 million, or $.54 per share, for the cumulative effect of adopting the new accounting standard for income taxes (SFAS No. 109), offset by an after-tax charge of $23 million, or $.47 per share, for actions taken to improve the competitive position of the Company's European businesses. Please see notes 4, 5, 6, 7 and 8 to the Consolidated Financial Statements. Net sales were $1.529 billion in the first six months of 1994, compared to $1.405 billion in the year earlier period. Gross margin for the second quarter of 1994 increased to 24%, compared to 23% for the prior year's period, reflecting improved pricing in many of the Company's worldwide markets. In North America, the Building Products segment benefitted from a 30% increase in insulation sales compared to the second quarter of 1993. In Europe, insulation sales continued to exceed the Company's manufacturing capacity in the region. In order to meet the demand in Europe, the Company acquired the United Kingdom based insulation business and the Kitsons distribution business of Pilkington plc (Pilkington) in June 1994. The Company is also adding a second production line at its insulation plant in Vise, Belgium. The purchase price of Pilkington was $110 million and was financed with borrowings from the Company's newly established $110 million short-term bank credit facility. In addition, the Company acquired UC Industries (UCI), a privately held United States producer of pink extruded polystyrene foam products for $44 million, consummated by the exchange of 855,556 shares of the Company's common stock for all the capital stock of UCI. This purchase extends the Company's line of building products. During the second quarter of 1994, the Company also established a joint venture to manufacture insulation products in Guangzhou, China. Please see note 3 to the Consolidated Financial Statements. In the composites business, North American sales grew 10%, driven by the automotive sector and an increase in activity across a broad range of the Company's industrial markets. The Company activated its Jackson, Tennessee plant in April 1994 to assist in meeting the demand for reinforcements. The Company continues to import products from other worldwide operations, at an added cost, as North American demand for the Company's reinforcements exceeds capacity in its North American facilities. Volume held steady and pricing stabilized in the Company's European composites business late in the quarter. During the second quarter 1994, the Company dedicated a new joint-venture manufacturing plant for glass-reinforced plastic pipe in Mochau, Germany. The Company's cost of borrowed funds for the second quarter of 1994 was $1 million higher than during the corresponding quarter of the prior year because of increased borrowing and higher interest rates during the quarter compared to a year ago. PAGE -19- LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS Cash flow from operations was a negative $6 million for the second quarter, compared to $12 million for the second quarter of 1993. The decrease in cash flow is primarily due to a $24 million increase in payments (net of insurance proceeds) for uninsured asbestos litigation claims and increased working capital needs compared to the prior year's quarter. Net inventories increased from $221 million at year-end 1993 to $259 million at the end of the second quarter primarily due to anticipated seasonal demand for building products and the purchase of inventories from the above mentioned acquisitions. Total receivables at June 30, 1994 were $447 million, $123 million higher than at year-end 1993 because of acquisitions and high sales levels for building products worldwide and composites in North America in the second quarter. At June 30, 1994, the Company's working capital was a negative $15 million and its current ratio was .99, compared to a negative $49 million and .94, respectively, at December 31, 1993. Total borrowings at June 30, 1994 were $332 million higher than at year-end 1993, primarily due to the Pilkington acquisition, capital expenditures, and asbestos payments (net of tax). In connection with the Pilkington acquisition, the Company established, effective June 1, 1994, a $110 million 364-day credit facility with a syndicate of banks led by the Bank of New York. In addition, effective July 18, 1994, the Company amended its long- term U.S. loan facility, led by Credit Suisse, to increase the available lines of credit by $100 million. In July 1994, the Company established a Canadian credit facility with a syndicate of banks, led by Credit Suisse Canada, serving as agent, replacing the previous facility which expired in July 1994. The new facility has a commitment of 95 million Canadian dollars (69 million U.S. dollars) and expires in October 1997. As of July 31, 1994, the Company had unused lines of credit of $186 million available under long- term bank loan facilities and an additional $96 million under short-term facilities, compared to $376 million and $64 million, respectively, at year- end 1993. The decline in unused available lines of credit reflects the Company's higher borrowings and an increase of outstanding letters of credit, supporting appeals from asbestos trials, counted against the Company's long- term U.S. loan facility. Capital spending for property, plant and equipment, excluding acquisitions, was $64 million during the second quarter. At the end of the quarter, approved capital projects, including furnace rebuilds, were $125 million. The Company expects that funding for these expenditures will be from the Company's operations and external sources as required. Payments for asbestos litigation claims during the second quarter 1994, including $15 million in defense costs, were $39 million. Proceeds from insurance were $14 million. In the second quarter 1994, the Company received about 5,300 new asbestos personal injury cases and closed approximately 5,900 cases. Over the next twelve months, the Company's payments for asbestos litigation claims, including defense costs, are expected to be approximately $300 million and proceeds from insurance of $175 million are expected to be available to cover these costs. Please see note 12 to the Consolidated Financial Statements. The Company expects funds generated from operations, together with funds available under long and short term bank loan facilities, to be sufficient to satisfy its debt service obligations under its existing indebtedness, as well as its contingent liabilities for uninsured asbestos personal injury claims. The Company has been deemed by the Environmental Protection Agency (EPA) to be a potentially responsible party (PRP) with respect to certain sites under the Comprehensive Environmental Response, Compensation and Liability Act (Superfund). The Company has also been deemed a PRP under similar state or local laws. In other instances, other PRPs have brought suits or claims against the Company as a PRP for contribution under such federal, state or local laws. During the second quarter of 1994, the Company was designated as a PRP in such federal, state, local or private proceedings for no additional sites. At June 30, 1994, a total of 38 such PRP designations remained unresolved by the Company, some of which designations the Company believes to be erroneous. The Company is also involved with environmental investigation or remediation at a number of other sites at which it has not been designated a PRP. The Company has established reserves for its Superfund (and similar state, local and private action) contingent liabilities which are reflected in the financial statements. The Company believes these reserves are adequate to cover these liabilities and are not material to the financial position or results of operations of the Company. In addition, based upon information presently available to the Company, and without regard to the PAGE -20- application of insurance, the Company believes that, considered in the aggregate, the additional costs associated with such contingent liabilities, including any related litigation costs, will not have a materially adverse effect on the Company's financial position or results of operations. The 1990 Clean Air Act Amendments (Act) provide that the EPA will issue regulations on a number of air pollutants over a period of years. Until these regulations are developed, the Company cannot determine the extent the Act will affect it. The Company anticipates that its sources to be regulated will include glass fiber manufacturing, resin manufacturing and asphalt processing activities. The Company currently expects glass fiber manufacturing to be regulated by 1997. Based on information now known to the Company, including the nature and limited number of regulated materials it emits, the Company does not expect the Act to have a material adverse effect on the Company's results of operations, financial condition, or long-term liquidity. PAGE -21- PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS See the paragraphs in Note 12, Contingent Liabilities, to the Consolidated Financial Statements above, which are incorporated here by reference. ITEM 2. CHANGES IN SECURITIES (a) None of the constituent instruments defining the rights of the holders of any class of the Company's registered securities was materially modified in the quarter ended June 30, 1994. (b) None of the rights evidenced by any class of the Company's registered securities was materially limited or qualified in the quarter ended June 30, 1994 by the issuance or modification of any other class of securities. ITEM 3. DEFAULTS UPON SENIOR SECURITIES (a) During the quarter ended June 30, 1994, there was no material default in the payment of principal, interest, sinking or purchase fund installments, or any other material default not cured within 30 days, with respect to any indebtedness of the Company or any of its significant subsidiaries exceeding 5 percent of the total assets of the Company and its consolidated subsidiaries. (b) During the quarter ended June 30, 1994, no material arrearage in the payment of dividends occurred, and there was no other material delinquency not cured within 30 days, with respect to any class of preferred stock of the Company which is registered or which ranks prior to any class of registered securities, or with respect to any class of preferred stock of any significant subsidiary of the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) The Company's annual meeting of stockholders was held April 21, 1994. (c) The matters voted upon at the meeting, and the votes cast with respect to each, were: 1. Election of three directors for a term expiring in 1997: Norman P. Blake - 35,647,432 shares cast for election and 458,310 shares withheld; Jon M. Huntsman, Jr. - 35,510,400 shares cast for election and 595,342 shares withheld; and W. Ann Reynolds - 35,567,309 shares cast for election and 538,433 shares withheld. 2. Approval of the action of the Board of Directors in selecting Arthur Andersen & Co. as independent public accountants for the Company for the year 1994: 35,453,061 shares cast for the proposal; 437,958 shares cast against; and 214,723 shares abstained. There were no broker nonvotes. PAGE -22- ITEM 5. OTHER INFORMATION The Company does not elect to report any information under this item. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. See Exhibit Index below, which is incorporated here by reference. (b) Reports on Form 8-K. The Company did not file any reports on Form 8-K during the quarter ended June 30, 1994. PAGE -23- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. OWENS-CORNING FIBERGLAS CORPORATION Registrant Date August 12, 1994 By /s/David W. Devonshire --------------- ------------------------------- David W. Devonshire Senior Vice President and Chief Financial Officer Date August 12, 1994 /s/Domenico Cecere --------------- ------------------------------- Domenico Cecere Vice President and Controller PAGE -24- EXHIBIT INDEX Exhibit Number Document Description - ------- -------------------- (10) Material Contracts. Credit Agreement, dated as of November 2, 1993, among Owens-Corning Fiberglas Corporation, the Banks listed on Annex A thereto, and Credit Suisse, as Agent for the Banks (incorporated herein by reference to Exhibit (4) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1993), as amended by Amendment No. 1 thereto (filed herewith). Rights Agreement, dated as of December 18, 1986, between Owens-Corning Fiberglas Corporation and Manufacturers Hanover Trust Company, as Rights Agent, including, as Exhibit B of such Rights Agreement, the form of Right Certificate (incorporated herein by reference to Exhibits 1 and 2 to the Company's Registration Statement on Form 8-A, dated December 23, 1986). The following documents are incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1993: - 1994 Corporate Incentive Plan - General Terms - Agreement, dated February 11, 1994, with Larry T. Solari. Owens-Corning Fiberglas Corporation Director's Charitable Award Program (incorporated herein by reference to Exhibit (10) to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 1993). Owens-Corning Fiberglas Corporation Executive Supplemental Benefit Plan, as amended (incorporated herein by reference to Exhibit (10) to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1993). Employment Agreement, dated as of December 15, 1991, with Glen H. Hiner (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1991), as amended by First Amending Agreement made as of April 1, 1992 (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 1992). Owens-Corning Fiberglas Corporation Stock Performance Incentive Plan (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 1992). Owens-Corning Fiberglas Corporation 1987 Stock Plan for Directors, as amended (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1992). PAGE -25- Form of Key Management Severance Benefits Agreement (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1991). Consulting Agreement, dated September 27, 1990, with William W. Boeschenstein (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1990). Owens-Corning Fiberglas Corporation 1986 Equity Partnership Plan, as amended (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1988), as amended by Amendment 1 thereto (incorporated herein by reference to Exhibit (19) to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 1989), by Amendment 2 thereto (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1989) and by Amendment 3 thereto (incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1990). The following documents are incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1989: - Pension Agreement, dated April 16, 1984, with William W. Colville. - Form of Directors' Indemnification Agreement. The following documents are incorporated herein by reference to Exhibit (10) to the Company's annual report on Form 10-K for 1987: - Owens-Corning Fiberglas Corporation Officers Deferred Compensation Plan. - Owens-Corning Fiberglas Corporation Deferred Compensation Plan for Directors, as amended. (11) Statement re Computation of Per Share Earnings (filed herewith). (99) Additional Exhibits. Subsidiaries of Owens-Corning Fiberglas Corporation, as amended (filed herewith). EX-10 2 EXHIBIT 10 AMENDMENT NO. 1 dated as of July 18, 1994 to CREDIT AGREEMENT dated as of November 2, 1993 THIS AMENDMENT NO. 1 (this "Amendment"), dated as of July 18, 1994, among OWENS-CORNING FIBERGLAS CORPORATION, a Delaware corporation (the "Borrower"), the banks listed on the signature pages hereof (the "Banks"), and CREDIT SUISSE, as Agent (the "Agent") (with capitalized terms used herein and not otherwise defined having the meaning ascribed thereto in the Credit Agreement hereinafter referred to), W I T N E S S E T H: WHEREAS, the Borrower, the Banks and the Agent have entered into a Credit Agreement dated as of November 2, 1993 (the "Credit Agreement"); WHEREAS, the Borrower has requested, and the Banks and the Agent have agreed to, the amendments to the Credit Agreement more fully set forth in this Amendment; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Borrower, the Banks and the Agent agree as follows: 1. Amendments. Upon and after this Amendment becomes effective, the Credit Agreement shall be amended as follows: (a) Section 1.01(a) shall be amended (i) by deleting the words "on the Agreement Date" and (ii) by deleting "$375,000,000" and inserting in lieu thereof "$475,000,000". (b) Section 1.02(a) shall be amended by deleting "$275,000,000" and inserting "$375,000,000" in lieu thereof. (c) Section 1.07(b) shall be amended by deleting "$50,000,000" in each instance where it appears and inserting in lieu thereof "$100,000,000". (d) Section 4.06 shall be amended by inserting the following after the end of clause (e) thereof and prior to the word "and": ", (f) Debt, designated by the Borrower from time to time, of the Borrower or of any Subsidiary in an aggregate amount not to exceed $110,000,000 in connection with and for the purpose of financing the acquisition or continued ownership by the Borrower or any Subsidiary of Pilkington Insulation Limited, Kitsons Insulation Products Limited and certain real property related thereto". (e) Section 4.06 shall be further amended by re- lettering the last clause thereof, presently clause (f), as clause (g). (f) The Credit Agreement shall be further amended by replacing all references therein to Section 4.06(f) with references to 4.06(g). (g) Section 4.08 shall be amended by inserting the following after the end of clause (h) thereof and prior to the word "and": ", (i) Investments made by the Borrower or any Subsidiary in Pilkington Insulation Limited and Kitsons Insulation Products Limited, each thereafter a Wholly Owned Subsidiary of Owens-Corning U.K. Limited, (j) Investments made by the Borrower, to the extent that consideration therefor consists of the Borrower's common stock". (h) Section 4.08 shall be further amended by re- lettering the last clause thereof, presently clause (i), as clause (k). (i) The Credit Agreement shall be further amended by replacing all references therein to Section 4.08(i) with references to 4.08(k). (j) Section 4.10 shall be amended by inserting the following after the end of clause (f) thereof and prior to the word "and": ", (g) the Guaranty by the Borrower, the obligations under which are subordinate and junior in right of payment to the Debt of the Borrower hereunder, providing for Guarantee Payments as defined and substantially as described in Schedule 4.10(g), with respect to certain obligations (not exceeding $230,000,000 in aggregate amount) of a Delaware limited liability company (the "LLC") in which all of the limited liability interests (other than certain preferred interests (the "MIPS") ordinarily having no voting or management rights) are owned directly or indirectly by the Borrower, (h) the Guaranty by the Borrower of the obligations of the Industrial Development Board of the City of Jackson, Tennessee (the "Board"), pursuant to the terms of the Undertaking Agreement, dated as of December 29, 1993, from the Borrower to each of The Prudential Insurance Company of America, BOT Financial Corporation and Morgan, Keegan & Company, Inc. of (A) the principal of the Notes (as defined in Appendix I to the Note Purchase Agreement, dated as of December 29, 1993, between the Board and The Prudential Insurance Company of America ("Appendix I")) in a maximum aggregate amount of $40,000,000 and (B) interest and Reinvestment Premium (as defined in said Appendix I), in each case in accordance with the terms and provisions of such Notes as in effect on the Amendment Effective Date of Amendment 1 to the Credit Agreement,". (k) Section 4.10 shall be further amended by re- lettering the last clause thereof, presently clause (g), as clause (i). (l) The Credit Agreement shall be further amended by replacing all references therein to Section 4.10(g) with references to 4.10(i). (m) Section 10.01 shall be amended by amending the definition of "Cash EBIT" to read in its entirety as follows: "'Cash EBIT' means, for any period, EBIT for such period plus (a) any amount deducted in the computation of EBIT for such period for (i) depreciation and amortization expense, (ii) additions to reserves accrued in connection with furnace rebuilding, (iii) additions to reserves with respect to actions, suits or proceedings against the Borrower or any Subsidiary with respect to claims arising out of the use of or exposure to asbestos products and (iv) additions to reserves relating to the restructuring charge accrued by the Borrower and its Subsidiaries during March 1994 minus (b) any amount added in the computation of EBIT for such period for reductions in reserves referred to in clause (a)(ii) or (iii) minus (c) to the extent not deducted or added, as appropriate, in the computation of EBIT for such period, the net after-tax amount of (i) actual cash disbursements during such period made with respect to claims arising out of the use of or exposure to asbestos products minus (ii) actual cash payments (including under insurance policies) received during such period with respect to claims arising out of the use of or exposure to asbestos products minus (d) to the extent not deducted in the computation of EBIT for such period, the amount of actual cash disbursements to the extent that such payments are charged against the restructuring reserves referred to in clause (a)(iv)." (n) Section 10.01 shall be further amended by inserting the following in the definition of "Permitted Subordinated Refinancing Debt" after the words "so repaid or repurchased" and before the period: "; it being understood that, Permitted Subordinated Refinancing Debt does not include any subordinated Debt of the Borrower that is incurred after the conversion into equity of existing Permitted Borrower Subordinated Debt, notwithstanding that the amount of such subordinated Debt, when issued, does not exceed the amount of such Permitted Borrower Subordinated Debt previously converted". (o) The Credit Agreement shall be further amended by deleting Annex A thereto and replacing it with Annex A hereto. (p) Schedule 4.06(b) shall be amended by amending Section 1(b)(6) thereof to read in its entirety as follows: "(6) for all principal of and interest on all loans and other extensions of credit under any lines of credit, credit agreements or promissory notes from a bank or other financial institution (including, without limitation, any letters of credit, bankers' acceptances, performance bonds and other credit facilities under such borrowing arrangements), and all fees, expenses, reimbursements, indemnities, premiums and other amounts payable under such borrowing arrangements;". (q) The Credit Agreement shall be further amended by inserting after Schedule 4.10, a new Schedule 4.10(g), which Schedule is attached to this Amendment as Annex B. (r) The Credit Agreement shall be further amended by inserting in place of Exhibits A-1 and A-2 thereof, the attached replacement Exhibits A-1 and A-2. 2. Amendment Effective Date; Conditions to Borrowing Increased Commitment Amounts. (a) This Amendment shall become effective as of the date first written above, but shall not become effective as of such date until this Amendment has been executed by the Borrower, the Banks and the Agent, and the Agent shall have received for the account of the Banks whose Commitments have been increased the upfront fees payable pursuant to the Letter Agreement dated June 22, 1994. (b) In the case of the initial Credit Extension which is a Utilization of the Increased Commitment Amounts (hereinafter defined), the obligation of each Bank to make its Loan on the occasion of such Credit Extension and the obligation of the Issuing Bank to issue a Letter of Credit on such occasion is subject to the fulfillment of each of the conditions listed in the attached Annex C, in addition to the conditions applicable thereto pursuant to Section 2.02 of the Credit Agreement. As used herein, the term "Utilization of the Increased Commitment Amounts" means (i) a Credit Extension constituting the issuance of a Letter of Credit which causes the aggregate amount available to be drawn under all outstanding Letters of Credit to exceed the limitation thereon contained in the proviso to the first sentence of Section 1.02(a) of the Credit Agreement without giving effect to the provisions of Section 1(b) of this Amendment, or (ii) a Credit Extension constituting a Loan by a Bank which would cause the aggregate unpaid principal amount of all Loans by such Bank to exceed the limitation thereon contained in Section 1.01(a) of the Credit Agreement, without giving effect to the provisions of Section 1(a) of this Amendment. 3. Representations and Warranties. The Borrower represents and warrants to the Agent and the Banks as follows: (a) Power; Authorization. The Borrower has the corporate power, and has taken all necessary corporate action to authorize it, to execute, deliver and perform in accordance with its terms this Amendment and to perform in accordance with its terms the Credit Agreement as amended by this Amendment. This Amendment has been duly executed and delivered by the Borrower and is, and the Credit Agreement as amended by this Amendment is, a legal, valid and binding obligation of the Borrower enforceable in accordance with its terms. (b) Required Approvals; Compliance with Law, etc. The execution, delivery and performance in accordance with its terms of this Amendment, and the performance in accordance with its terms of the Credit Agreement as amended by this Amendment, do not and will not (i) require any Governmental Approval or any consent or approval of the stockholders of the Borrower or of any Subsidiary other than consents and approvals that have been obtained and are listed on Schedule 3.02 to the Credit Agreement, (ii) violate or conflict with, result in a breach of, or constitute a default under, (A) any Contract to which the Borrower or any Subsidiary is a party or by which any of them or any of their respective properties may be bound or (B) any Applicable Law or (iii) result in or require the creation of any Lien upon any assets of the Borrower or any Consolidated Subsidiary except for Liens, if any, in favor of the Agent and the Banks arising under Sections 1.12 and 8.06 of the Credit Agreement. 4. Survival. Each of the foregoing representations and warranties shall be made at and as of the date this Amendment becomes effective. Each of the representations and warranties made under the Credit Agreement as amended by this Amendment (and including those made herein) shall survive to the extent provided in the Credit Agreement and not be waived by the execution and delivery of this Amendment, or any investigation by the Agent or the Banks or any of them. 5. Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York (without giving effect to its choice of laws principles). 6. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be deemed to be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 7. Reference to Agreement. From and after the Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereof", "hereunder" or words of like import, and all references to the Credit Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind and nature shall be deemed to mean the Credit Agreement as modified and amended by this Amendment. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective authorized officers as of the date first above written. OWENS-CORNING FIBERGLAS CORPORATION By _______________________________ Name: Title: By _______________________________ Name: Title: CREDIT SUISSE, as Agent and as a Bank By ________________________________ Name: Title: ABN AMRO BANK, N.V. By ________________________________ Name: Title: THE BANK OF NEW YORK By ________________________________ Name: Title: THE BANK OF NOVA SCOTIA By ________________________________ Name: Title: BARCLAYS BANK PLC By ________________________________ Name: Title: CHEMICAL BANK By _______________________________ Name: Title: CITIBANK, N.A. By _______________________________ Name: Title: THE FIRST NATIONAL BANK OF CHICAGO By _______________________________ Name: Title: THE FUJI BANK, LIMITED By ______________________________ Name: Title: MELLON BANK, N.A. By ______________________________ Name: Title: THE MITSUBISHI BANK, LTD. (CHICAGO BRANCH) By _____________________________ Name: Title: THE NORTHERN TRUST COMPANY By _____________________________ Name: Title: ROYAL BANK OF CANADA By ____________________________ Name: Title: THE TORONTO-DOMINION BANK By ___________________________ Name: Title: TRUST COMPANY BANK By __________________________ Name: Title: By __________________________ Name: Title: KREDIETBANK, N.V. By __________________________ Name: Title: Annex A Banks, Lending Offices and Notice Addresses Commitment CREDIT SUISSE $53,666,666.66 Domestic Lending Office: Credit Suisse Cayman Island Branch c/o Credit Suisse New York Branch Tower 49 12 East 49th Street New York, New York 10017 LIBOR Lending Office: Credit Suisse Cayman Island Branch c/o Credit Suisse New York Branch Tower 49 12 East 49th Street New York, New York 10017 Notice Address: Credit Suisse Tower 49 12 East 49th Street New York, New York 10017 Telex No.: 420149 CRESWIS Telecopy No.: (212) 238-5073 Telephone No.:(212) 238-5082 Attention: Barry Zamore Banks, Lending Offices and Notice Addresses Commitment THE BANK OF NEW YORK $41,666,666.67 Domestic Lending Office: The Bank of New York One Wall Street New York, New York 10286 Eurodollar Lending Office: The Bank of New York One Wall Street New York, New York 10286 Notice Address: One Wall Street, 22nd Floor New York, New York 10286 Telex No.: 62763UW Telecopy No.: (212) 635-6397 Telephone No.: (212) 635-6725 Attention: Susan Baratta/Madlyn Myrick Banks, Lending Offices and Notice Addresses Commitment THE BANK OF NOVA SCOTIA $44,333,333.33 Domestic Lending Office: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Eurodollar Lending Office: The Bank of Nova Scotia 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Notice Address: 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Telex No.: 542319 (Scotia A&L) Telecopy No.: (404) 888-8988 Telephone No.: (404) 877-8552 Attention: Phyllis Walker Banks, Lending Offices and Notice Addresses Commitment BARCLAYS BANK PLC $19,000,000 Domestic Lending Office: Barclays Bank plc 75 Wall Street New York, New York 10265 Eurodollar Lending Office: Barclays Bank plc 75 Wall Street New York, New York 10265 Notice Address: 222 Broadway, 12th Floor New York, New York 10038 Telex No.: 126946 Telecopy No.: (212) 412-4090 Telephone No.: (212) 412-5876 Attention: Nitin Sangle Banks, Lending Offices and Notice Addresses Commitment ROYAL BANK OF CANADA $44,333,333.33 Domestic Lending Office: Royal Bank of Canada Pierrepont Plaza 300 Cadman Plaza, 15th Floor Brooklyn, New York 11201-2701 Eurodollar Lending Office: Royal Bank of Canada Pierrepont Plaza 300 Cadman Plaza, 15th Floor Brooklyn, New York 11201-2701 Notice Address: Royal Bank of Canada Pierrepont Plaza 300 Cadman Plaza, 15th Floor Brooklyn, New York 11201-2701 Telex No.: 62519 ROYBAN or 420464 RBOC UI Telecopy No.: (718) 522-6292 Telephone No.: (212) 858-7183 Attention: Elizabeth Gonzalez Banks, Lending Offices and Notice Addresses Commitment CHEMICAL BANK $44,333,333.33 Domestic Lending Office: Chemical Bank 270 Park Avenue New York, New York 10017 Eurodollar Lending Office: Chemical Bank 270 Park Avenue New York, New York 10017 Notice Address: 270 Park Avenue New York, New York 10017 Telex No.: Telecopy No.: (212) 682-8937 Telephone No.: (212) 270-4812 Attention: Linda Hill Banks, Lending Offices and Notice Addresses Commitment ABN AMRO BANK, N.V. $12,666,666.67 Domestic Lending Office: ABN AMRO Bank, Pittsburgh Branch One PPG Place, Suite 2950 Pittsburgh, Pennsylvania 15222 Eurodollar Lending Office: ABN AMRO Bank, Pittsburgh Branch One PPG Place, Suite 2950 Pittsburgh, Pennsylvania 15222 Notice Address: One PPG Place, Suite 2950 Pittsburgh, Pennsylvania 15222 Telex No.: 199162 Telecopy No.: (412) 566-2266 Telephone No.: (412) 566-2250 Attention: Michelle Guza/Monica Meis Banks, Lending Offices and Notice Addresses Commitment CITIBANK, N.A. $25,333,333.33 Domestic Lending Office: Citibank, N.A. 399 Park Avenue New York, New York Eurodollar Lending Office: Citibank, N.A. 399 Park Avenue New York, New York Notice Address: 200 South Wacker Drive 31st Floor Chicago, Illinois 60606 Telex No.: Telecopy No.: (312) 993-6706 Telephone No.: (312) 993-3094 Attention: Steven Niceforo Banks, Lending Offices and Notice Addresses Commitment THE FIRST NATIONAL BANK OF CHICAGO $25,333,333.33 Domestic Lending Office: The First National Bank of Chicago One First National Plaza Chicago, IL 60670 Eurodollar Lending Office: The First National Bank of Chicago One First National Plaza Chicago, IL 60670 Notice Address: One First National Plaza Suite 0634 Chicago, IL 60670 Telex No.: 4330253 FNBCUI Telecopy No.: (312) 732-4840 Telephone No.: (312) 732-7659/6294 Attention: Ernest Mesidera/Charlene Hicks Banks, Lending Offices and Notice Addresses Commitment THE FUJI BANK, LIMITED $31,666,666.67 Domestic Lending Office: The Fuji Bank, Limited 225 West Wacker Drive, Suite 2000 Chicago, IL 60606 Eurodollar Lending Office: The Fuji Bank, Limited 225 West Wacker Drive, Suite 2000 Chicago, IL 60606 Notice Address: The Fuji Bank, Limited 225 West Wacker Drive, Suite 2000 Chicago, IL 60606 Telex No.: 253114 FUJI CGO Telecopy No.: (312) 621-0539/419-3677 Telephone No.: (312) 621-0538 Attention: Cely Tanghal Banks, Lending Offices and Notice Addresses Commitment MELLON BANK, N.A. $29,000,000 Domestic Lending Office: Mellon Bank, N.A. Three Mellon Bank Center Pittsburgh, PA 15259 Eurodollar Lending Office: Mellon Bank, N.A. Three Mellon Bank Center Pittsburgh, PA 15259 Notice Address: Mellon Bank, N.A. Three Mellon Bank Center Pittsburgh, PA 15259 Telex No.: 199103 or 199151 Telecopy No.: (412) 234-5049/236-2027 Telephone No.: (412) 234-4749 Attention: Rose Covel Banks, Lending Offices and Notice Addresses Commitment THE MITSUBISHI BANK, LTD. $19,000,000 (CHICAGO BRANCH) Domestic Lending Office: 115 S. LaSalle St., Suite 2100 Chicago, IL 60603 Eurodollar Lending Office: 115 S. LaSalle St., Suite 2100 Chicago, IL 60603 Notice Address: The Mitsubishi Bank, Ltd. (Chicago Branch) 115 S. LaSalle St., Suite 2100 Chicago, IL 60603 Telex No.: 255267 or 284339 BISHIBANK CGO Telecopy No.: (312) 263-2555 Telephone No.: (312) 269-0473 Attention: Manager, Loan Administration Banks, Lending Offices and Notice Addresses Commitment THE NORTHERN TRUST COMPANY $25,333,333.33 Domestic Lending Office: The Northern Trust Co. 50 S. LaSalle St. Chicago, IL 60675 Eurodollar Lending Office: The Northern Trust Co. 50 S. LaSalle St. Chicago, IL 60675 Notice Address: The Northern Trust Company 50 S. LaSalle Street Chicago, IL 60675 Telex No.: 254419 or 270514 NORTRUST CGO Telecopy No.: (312) 444-3508 Telephone No.: (312) 444-4567 Attention: Paul Beierwaltes Banks, Lending Offices and Notice Addresses Commitment THE TORONTO-DOMINION BANK $31,666,666.67 Domestic Lending Office: The Toronto-Dominion Bank 909 Fannin, Suite 1700 Houston, TX 77010 Eurodollar Lending Office: The Toronto-Dominion Bank 909 Fannin, Suite 1700 Houston, TX 77010 Notice Address: The Toronto-Dominion Bank 909 Fannin, Suite 1700 Houston, TX 77010 Telex No.: 177047 TORDOM FXNY Telecopy No.: (713) 951-9921 Telephone No.: (713) 653-8281 Attention: Frederic B. Hawley Banks, Lending Offices and Notice Addresses Commitment TRUST COMPANY BANK $15,000,000 Domestic Lending Office: Trust Company Bank 25 Park Place Atlanta, GA 30303 Eurodollar Lending Office: Trust Company Bank 25 Park Place Atlanta, GA 30303 Notice Address: Trust Company Bank 25 Park Place Atlanta, GA 30303 Telex No.: 542210 Telecopy No.: (404) 588-8505 Telephone No.: (404) 588-7077 Attention: Dereka G. Binns Banks, Lending Offices and Notice Addresses Commitment KREDIETBANK $12,666,666.67 Domestic Lending Office: Kredietbank 125 West 55th Street New York, New York 10019 Eurodollar Lending Office: Kredietbank 125 West 55th Street New York, New York 10019 Notice Address: Kredietbank 125 West 55th Street New York, New York 10019 Telex No.: Telecopy No.: (212) 956-5580 Telephone No.: (212) 541-0727 Attention: John Thierfelder Annex B Schedule 4.10(g) DESCRIPTION OF MIPS GUARANTY Owens-Corning Fiberglas Corporation (the "Guarantor") will irrevocably and unconditionally agree, to the extent set forth below, to pay in full to the holders of the MIPS (as defined in Section 4.10), or otherwise fulfill obligations to such holders with respect to, the below-defined Guarantee Payments (except to the extent paid by the LLC (as defined in Section 4.10, hereinafter the "Company")), as and when due, regardless of any defense, right of set-off or counterclaim which the Company may have or assert. The following payments and obligations, to the extent not paid or fulfilled, as the case may be, by the Company (the "Guarantee Payments") will be subject to the guarantee (without duplication): (i) any accumulated arrears and accruals of unpaid dividends which have been theretofore declared on the MIPS of moneys legally available therefor, (ii) the redemption price (including all accumulated arrears and accruals of unpaid dividends) payable with respect to MIPS called for redemption by the Company as an optional redemption or otherwise out of funds available to the Company, (iii) the lesser of (a) the aggregate of the liquidation preference and all accumulated arrears and accruals of unpaid dividends (whether or not declared) to the date of payment and (b) the amount of remaining assets of the Company, (iv) conversion or exchange of the MIPS for shares of the capital stock of the Guarantor and (v) any Additional Amounts payable by the Company. The Guarantor's obligation to make a Guarantee Payment that constitutes a payment may be satisfied by direct payment of the required amounts by the Guarantor to the holders of MIPS or by causing the Company to pay such amounts to such holders. The Guarantor's obligation to make a Guarantee Payment that constitutes a conversion may be satisfied by the issuance of shares of the capital stock of the Guarantor to the holders of MIPS. For purposes of this paragraph, "Additional Amounts" means any amounts to be paid by the Guarantor so that the net amounts received by the holders of the MIPS, after any withholding or deduction of taxes, duties, assessments or governmental charges required by law, will equal the amount which would have been receivable in respect of the MIPS in the absence of such withholding or deduction, except that no such Additional Amounts will be payable to a holder of MIPS (or a third party on his behalf) with respect to any of the MIPS (a) if such holder is liable for such taxes, duties, assessments or governmental charges in respect of the MIPS by reason of such holder's having some connection with the United States, any State thereof or any other jurisdiction through which or from which such payment is made, other than being a holder of the MIPS, or (b) if the Company or the Guarantor has notified such holder of the obligation to withhold taxes and requested but not received from such holder a declaration of non-residence or other similar claim for exemption, and such withholding or deduction would not have been required had such declaration or similar claim been received. Annex C CONDITIONS TO UTILIZATION OF INCREASED COMMITMENT AMOUNTS (1) Each Bank shall have received a duly prepared and executed replacement Domestic Note and replacement LIBOR Note, reflecting in each case the Commitment of such Bank as reflected on said revised Annex A; (2) The Agent shall have received, with sufficient copies for each Bank, each of the following, in form and substance satisfactory to the Agent: (a) a certificate of the Secretary or an Assistant Secretary of the Borrower, dated the date of such Credit Extension, substantially in the form of Annex C-1 attached hereto, to which shall be attached the copies of the resolutions referred to in such certificate; (b) a good standing certificate with respect to the Borrower, issued as of a recent date by the Secretary of State or other appropriate official of the jurisdiction of the Borrower's incorporation, together with a telegram from such Secretary of State or other official, updating the information in such certificate; (c) an opinion of the General Counsel of the Borrower, dated the date of such Credit Extension, substantially in the form attached hereto as Annex C-2, and acceptable to the Agent; and (d) Subsidiary Confirmations from each of the Borrower's Wholly-Owned Domestic Subsidiaries, in the form attached hereto as Annex C-3. EX-11 3
Exhibit (11) OWENS-CORNING FIBERGLAS CORPORATION AND SUBSIDIARIES COMPUTATION OF PER SHARE EARNINGS For the Quarter Ended Six Months Ended June 30, June 30, 1993 1992 1993 1992 ---- ---- ---- ---- Primary: - -------- Net Income $ 45 $ 33 $ 63 $ 50 ======= ======= ======= ======= Weighted average number of shares outstanding (thousands) 43,423 42,626 43,314 42,573 Weighted average common equivalent shares (thousands): Deferred awards 22 307 24 310 Stock options using average market price 611 588 618 562 ------- ------- ------- ------- Primary weighted average number of common shares outstanding and common equivalent shares (thousands) 44,056 43,521 43,956 43,445 ======= ======= ======= ======= Primary per share amount $ 1.03 $ .76 $ 1.44 $ 1.16 ======= ======= ======= ======= Fully Diluted: - -------------- Net Income $ 47 $ 35 $ 67 $ 54 ======= ======= ======= ======= Weighted average number of shares outstanding (thousands) 43,423 42,626 43,314 42,573 Weighted average common equivalent shares (thousands): Deferred awards 22 307 24 310 Stock options using the higher of average market price or market price at end of period 613 603 627 587 Shares from assumed conversion of debt 5,798 5,798 5,798 5,798 ------- ------- ------- ------- Fully diluted weighted average number of common shares outstanding and common equivalent shares (thousands) 49,856 49,334 49,763 49,268 ======= ======= ======= ======= Fully diluted per share amount $ .95 $ .71 $ 1.35 $ 1.11 ======= ======= ======= =======
EX-99 4 Exhibit (99) State or Other Jurisdiction Subsidiaries of Owens-Corning Under the Laws of Fiberglas Corporation (06/30/94) Which Organized - -------------------------------------------- --------------- Barbcorp, Inc. Delaware Dansk-Svensk Glasfiber A/S Denmark Deutsche Owens-Corning Glasswool GmbH Germany Eric Company Delaware European Owens-Corning Fiberglas Belgium Fiberglas Canada Inc. Canada Fiberglas Comercial Exportadora Brazil e Importadora Ltda. IPM Inc. Delaware Kitsons Insulation Products Ltd. United Kingdom Matcorp, Inc. Delaware N. V. Owens-Corning S.A. Belgium O/C/FIRST CORPORATION Ohio OCFOGO, Inc. Delaware OCFSC, Inc. U.S. Virgin Islands O.C. Funding B.V. The Netherlands O/C/SECOND CORPORATION Delaware Owens-Corning A/S Norway Owens-Corning Building Products (U.K.) Ltd. United Kingdom Owens-Corning Cayman Limited Cayman Islands Owens-Corning Changchun Guan Dao Company Ltd. PRC China Owens-Corning Fiberglas A.S. Limitada Brazil Owens-Corning Fiberglas Deutschland GmbH Germany Owens-Corning Fiberglas Espana, S.A. Spain Owens-Corning Fiberglas France, S.A. France Owens-Corning Fiberglas (G.B.) Ltd. United Kingdom Owens-Corning Fiberglas (Italy) S.r.l. Italy Owens-Corning Fiberglas Norway A/S Norway Owens-Corning Fiberglas S.A. Uruguay Owens-Corning Fiberglas Sweden AB Sweden Owens-Corning Fiberglas Sweden Inc. Sweden Owens-Corning Fiberglas Technology Inc. Illinois Owens-Corning Fiberglas (U.K.) Ltd. United Kingdom Owens-Corning Fiberglas (Guangzhou) Fiberglas Co. Ltd. PRC China Owens-Corning Holdings Limited Cayman Islands Owens-Corning Isolation France S.A. France Owens-Corning Overseas Holdings, Ltd. Delaware Owens-Corning (Overseas) Management Limited Cyprus Owens-Corning Real Estate Corporation Ohio Owens-Corning Veil Netherlands B.V. The Netherlands Owens-Corning Veil U.K., Ltd. United Kingdom Owens-Corning Vertriebs GmbH Germany Palmetto Products, Inc. Delaware Scanglas Ltd. United Kingdom THB Development, Inc. Delaware UC Industries, Inc. Delaware Willcorp, Inc. Delaware Wrexham A.R. Glass Ltd. United Kingdom -----END PRIVACY-ENHANCED MESSAGE-----